Confidential Boston Herald Documents Show Staff Could Be Cut By 50 to 60 Percent
Monday, February 05, 2018
GoLocalProv Business Team
|Deal book for the sale of the Herald|
According to the deal book, the Herald staff would be reduced from the present staffing level of 228 by 50 percent to 60 percent under new ownership. The deal book was prepared by a private investment group and not by the Boston Herald.
Presently, the Boston Herald is in bankruptcy and both GateHouse Media -- owners of the Providence Journal and the Worcester Telegram -- and Florida venture capitalist Robert Loring of Revolution Capital Group are reported to be submitting bids.
READ THE DEAL BOOK BELOW
The deal book, which was prepared for Richard Whippen who is the Chief Executive Officer for Washington Suburban Press Network (WSPN) and Media Prowler, both Jeff Bezos Companies, shows how the Herald is being pitched.
Whippen also heads Whip It Media.
He is a former GateHouse Media executive in New England — he served as Director of Advertising from 2004 to 2007.
|Whippen, former GateHouse and Boston Herald executive|
According to the documents, “This unique offering has many deceptively attractive features that Whip It Media is pursuing to secure a loan through SunTrust Bank with a potential purchase price of approximately $5,200,000.“
The deal book outlines a series of cutbacks at the Herald that could transform the bankrupt newspaper into profitability.
Efforts to reach Whippen were unsuccessful.
Cuts to the Herald
According to the documents, “The Boston Herald has 228 employees, approximately 60% of whom belong to a union. Herald Interactivity, the company’s digital media group, is completely non-union.”
The document goes on to outline the status of the union contracts — specifically, that the editorial guild and the commercial guild contracts have both expired and both the Teamsters and typographers' contracts "expire in 2018.”
The document outlines that the Herald's next owner should ask the court to void the outsourced delivery operations which are now conducted by the Boston Globe.
“The expectation is that the new owner would not assume these obligations and would obtain appropriate approval to avoid them.”
“With total salary equaling about 50% of the total revenue and in comparison to other newspapers and media companies across the country, the Boston Herald is grossly overstaffed. The opportunity to start with a roughly 60 people staff reduction or approximately $4,160,000 in immediate savings.”
The document also outlines even greater cuts. “The Boston Herald should be operating at about 100 to 125 employees. So after the first year, it would make sense to reduce by another 30 employees or $1 million + in savings.”
The deal book also anticipates the discontinuation of $3 million in annual pension payments.
Office Space — “The Boston Herald leases two floors of an office building in the Seaport District of Boston totaling approximately 50,000 square feet. The lease agreement runs through 2022. Currently, monthly lease costs are $139,000 excluding electricity.”
“The lease has approximately 5 more years left on it. The potential for the filing for bankruptcy and leaving the lease for a much more suitable space with about a $75,000 a month saving is realistic. Fortunately, the pricing for space is at a low cost per sq ft is a premium space, so subletting is another option as well.”
The Herald has only $1.7 million cash on hand.
It only generated $8.7 million in print advertising and $2.8 million in digital for the fiscal year 2018. Advertising expenses are almost four million ($3.8M).
In the past four years, the Herald lost more than $8 million.
Editor's Note: The article was updated to affirm that the deal book was not prepared by the Boston Herald bankrupt entity, but by a private group seeking to potentially purchase the Boston Herald.